These figures show the internal differences between the internal and external equalized valves. In the externally equalized valve, there is packing(blue line) around the push rods that keep outlet pressure away from the diaphragm. Instead, suction pressure is applied to the evaporator side of the diaphragm through tubing.
The external equalizer type of valve must be used to compensate for an excessive pressure drop through the evaporator. The equalizer line should be connected to the evaporator outlet of the suction line between the TEV bulb and the compressor inlet. If the packing leaks on the TEV pushrods, it won’t affect the bulb temperature when the connection is downstream of the bulb. Make this connection at the 12 o’clock position. This prevents collection of oil in the equalizer line.
Pressure drop between the valve outlet and the evaporator outlet is the most important of the low-side pressure losses that affect valve performance. These pressure drops will hold a TEV in a relatively “restricted” position. This will reduce system capacity unless a valve with an external equalizer is used.
A thermostatic expansion valve must have the external equalizer feature for best performance when a pressure drop type refrigerant distributor is used at the evaporator inlet.
Excerpt from Technical Institute Manual 1, available from the online store of the Refrigeration Service Engineers Society (RSES.ORG)